South Africa’s sugar tax has changed – here’s when to expect it

Finance Minister Pravin Gordhan has delivered his 2017 budget speech introducing a host of new tax and finance adjustments for 2017.

While the majority of the budget focused on the implementation of transformation within South Africa’s economy and a renewed focus on growth, Gordhan also gave an update on the status of one of South Africa’s most controversial new taxes – the proposed “sugar” tax.

According to Gordhan, further consultations were taking place on the tax on sugary beverages and the proposed design was being revised to include both intrinsic and added sugars.

“Further consultations are currently taking place on the tax on sugary beverages. Arising from these discussions, and working closely with the Department of Health, the proposed design has been revised to include both intrinsic and addeds,” said Gordhan.

The tax will be implemented later this year once details are finalised and the legislation is passed.The proposed carbon tax and its date of implementation will be considered further in Parliament this year.

“The tax will be implemented later this year once details are finalised and the legislation is passed,” Gordhan concluded.

Original proposals

Government originally proposed that these drinks be taxed at a rate of 2.29 cents per gram of sugar, with the idea that drinks with large amounts of added sugar will be more taxed more.

Drinks which contain natural sugars – like unsweetened milk and 100% fruit juice – would not be taxed while sugar-sweetened drinks of which the sugar content is not disclosed on the packaging would be taxed at a fixed sugar level of 50 grams per 330 ml.

Changes

According to Gordhan the new tax will now look at both intrinsic and added sugars when calculating the tax.

According to a report by BusinessDay, Treasury deputy director-general Ismail Momoniat told journalists that Treasury had also proposed a new threshold that would make the first 4g of sugar per 100ml beverage exempt from the sugar tax.

He also noted that 100% fruit juices and milk products would still be considered exempt from the tax.